mass affluent

20 Pages·2012·5.4 MB·English

REPORT
Affluence
in America:
A Financial
View of the
Mass Affluent
TABLE OF CONTENTS
1
Executive Summary................................................................................................................
2
Meet the Mass Affluent.........................................................................................................
4
They’re Shrinking in Number................................................................................................
8
Their Lifestyle.........................................................................................................................
9
Media Consumption..............................................................................................................
12
The Rich Are Different – From Each Other.........................................................................
13
The Distinct Segments of the Mass Affluent ....................................................................
15
How Do I Reach Them?.......................................................................................................
15
Why Segmenting is Important......................................................................................
16
The Day in the Life of a “Family Fortune” household.......................................................
17
Conclusion............................................................................................................................
1 Copyright © 2012 The Nielsen Company.
ABOUT THIS REPORT
In over 100 countries around the world, Nielsen provides the most complete understanding of what consumers watch and buy. In the
U.S., Nielsen has delivered insights about consumers for almost 90 years. Affluence in America: A Financial Perspective of the Mass
Affluent offers a fresh perspective on the affluent consumer segment of the U.S. economy. This report highlights the importance of
this market and provides insights to help marketers succeed in the opportunities that lie ahead.
“
This report provides a general foundation for building effective strategies
that will increasingly be the primary drivers of growth in virtually all product
and service categories for the Mass Affluent. Understanding the distinctive
patterns of demographics, lifestyles and consumption can lead the way to a
sizeable and growing impact on total market share.
”
EXECUTIVE SUMMARY
In recent years, a new segment of wealthy Americans has emerged that represents 11 percent of all U.S. households. Known as
the Mass Affluent, they typically were born during the post-war baby boom and grew up in middle-class households, earning
rather than inheriting their money. For the financial services and retail industries, they represent a significant and highly
sought-after market, especially now as they enter a pivotal period when many are rolling over 401(k) funds into retirement
accounts and anticipating inheritances.
Based on an analysis by Nielsen, the Mass Affluent consists of seven distinct groups, each with its own lifestyles, media
patterns and preferences when considering financial services. But, these high-earning households can be difficult to find and
even harder to sell to. Many live in the suburbs beyond the major metros that have been the traditional centers of American
wealth. And thanks to an explosion of financial media, they are sophisticated consumers who often tune out traditional
marketing strategies. Perhaps most challenging of all, many simply don’t think of themselves as rich.
Highlights of the Mass Affluent:
• They have income producing assets between $250,000 - $1,000,000
• Their estimated aggregated income producing assets total more than $7.5 trillion
• Two-thirds are over 55 years old
• Most are couples without kids or empty nesters
• They own their own home
• They work in Finance, Business and Management careers, or own their own business
• They are avid readers of newspapers, trade journals, travel and home-related magazines
• Possess multiple investment accounts including 401K, IRA, CDs and hold a fixed mortgage
• Adopters of high-end technology like digital recorders, video game consoles, smartphones and tablet devices
• They tend to shop less frequently than other groups, but spend more per shopping trip
Copyright © 2012 The Nielsen Company. 1
MEET THE MASS AFFLUENT
Who are they?
Affluence in America brings to mind lavish
beach and ski vacations and first-class
plane seats (when the company jet just
won’t do). But the last two decades have
spawned another class of wealth whose
members aren’t typically found eating
caviar or summering in Europe. This new
crop of wealthy Americans was raised in
middle-class suburbs and benefited from
college educations and years of economic
prosperity during the bull market of the
Financial Grouping Criteria
1990s. Today, they’re the empty-nesters
converting their kids’ old rooms to home
gyms, shopping at club warehouses, Average Income Income Producing Assets (IPA)
and workaholics fiddling with their Range
smartphones on the express commuter
train.
Mass Market $50,722 Less than $250,000
They are Mass Affluents. Nielsen P$YCLE,
the segmentation system that classifies Mass Affluent $105,500 Between $250,000- $1,000,000
households into 58 types based on
Affluent $155,135 More than $1,000,000
demographics and financial behaviors,
defines this group as households within
The average income of a Mass Affluent household is more than double that of a Mass Market
seven distinct segments with assets
household and more than two-thirds the average reported by Affluent households.
between $250,000 and $1,000,000. Source: Nielsen Financial Track, 2011
They have a distinct lifestyle from the rest
of the nation in terms of demographics,
media consumption, financial attitudes
and—most important to financial
Household Percent by Income Group
institutions —preferences for financial
products and services.
Total Mass Mass Affluent
Although amassing assets of $250,000 Market Affluent
to $1 million may seem modest
compared to the bank accounts of the
big city elite, there are only six percent Under $50,000 51.6 60.1 11.6 5.7
of US households with greater Income
$50,000 - $100,000 32.6 30.6 46.4 34.2
Producing Assets (IPA). Nielsen Income
Producing Assets (IPA) is a measure $100,000 - $249,999 14.7 8.9 39.6 49.0
of liquid wealth which includes the
$250,000 - $499,999 0.8 0.2 1.7 7.4
value of checking accounts, savings
products, money market accounts and $500,000+ 0.4 0.1 0.7 3.7
CDs, investment products, retirement
accounts, and other asset classes that are While many Mass Affluent households (42%) have incomes greater than $100,000, the majority
relatively easy to liquidate. It does not actually fall into the $50,000 to $100,000 range. The higher assets they have amassed may represent
a lifetime of savings from a moderate income rather than an ultra high household income.
include the value of any real estate owned
Source: Nielsen Financial Track 2011
by the household.
2 Copyright © 2012 The Nielsen Company.
Affluence Groups – Percent of Market
$7.5 trillion
4.4%
Estimated aggregated
11.1%
income producing
assets
MASS AFFLUENT IS
13,000,000
HOUSEHOLDS
84.5%
Average Income
and IPA increased
by 2% between
Mass Market Mass Affluent Affluent
2010-2012
More than 13 million households are classified as Mass Affluent based
on their assets, representing approximately 11% of all US households
or nearly three times as many as are classified as Affluent.
Source: Nielsen Income Producing Assets (IPA) 2011
More than 13 million households are group has seen both their average IPA and capture a portion of the Affluent Market
classified as Mass Affluent based on their average household income increase by 2% and the high profit that often comes from
assets, representing approximately 11% of each during this same period. relationships with those households.
all U.S. households or nearly three times The Mass Affluent exists as a sweet spot
Most Mass Affluents are Baby Boomers,
as many as are classified as Affluent. between these two groups, offering
over age 55. Most of these married
marketers a larger, accessible audience
In addition to their above average assets, couples are empty nesters enjoying a quiet
with above average profit margins.
they also reported an average household lifestyle, but some still have teenagers
income of $105,500 in 2011, more than who haven’t left the nest yet. They are
50% higher than the national average primarily Caucasian – but 36% more
income of $62,912.i likely than average to be Asian American.
They are well-educated with bachelor’s
There has been a common theory over the
and post-graduate degrees which
last few years that “the rich are getting
prepared them for white collar careers
richer.” An analysis of recent income and
in management, business and finance.
asset data does show this to be true – total
Given their strong professional careers,
assets for these households have grown
they often find themselves in leadership
over the last two years – but it also reveals
positions – both at work and in their
distinct differences between the Affluent
and the Mass Affluent. While the average communities. 6 million households moved up
household IPA within the Affluent group The Mass Market appeals to many from Mass Affluent to Affluent
has increased 2.6% compared to two years marketers because of the sheer number group since 2010
ago, the average household income for of households in that group. Households
those households is actually down 3% with less than $250,000 in IPA represent
over the past two years. The Mass Affluent 85% of all U.S. households. Others seek to
Copyright © 2012 The Nielsen Company. 3
THEY’RE SHRINKING IN NUMBER
While the data shows that the assets and Change in Group Size Year Over Year
income of the Mass Affluent have increased
YOY 2011-2012
slightly in recent years, it also shows that
the size of the group is shrinking. After
initial post-recession rebounds by both
the Affluent and Mass Affluent groups, the AFFLUENT
number of households classified as Mass MASS
Affluent is down from its peak in early 5.20
% MARKET MASS
2010. The redistribution of households by
affluence has resulted in a shift of about 0.11 AFFLUENT
5% of total households, or nearly 6 million %
-3.49
households, from the Mass Affluent group
%
to the Affluent group.
Marketers need a robust understanding
of the Mass Affluents – who they are,
where they live, what products they prefer Affluent Mass Market Mass Affluent
and how to best market to them. To win
Even though the Mass Affluent group is shrinking, approximately 2% of the households have seen
over this group, marketers will need to
increases to IPA and income in the past two years. Additionally, 5% also moved up into the Affluent group.
understand how to sub-segment the
Source: Nielsen Financial Track 2012
types of households within this group,
as well as develop new products and
services, differentiated messages and
varied channels to serve them. But as the
Financial Products by Affluence Groups
largest affluent group in America, the Mass
Affluent can offer significant return on
450
these investments.
And not only is the size of this group 400
shrinking, but their use of specific products
350
and services has declined in recent years.
As interest rates have declined, use of CDs 300
and money market savings accounts are
250
down more than ten percent among Mass
Affluent households compared to two years 200
ago. Negative equity and uncertainty in the
housing market has also led to a significant 150
decrease in use of home equity loans and
100
HELOCs by this group.
50
But as a group, Mass Affluents are still
more than twice as likely to use any type of 0
retirement or investment product, including Money CDs 401(k) Home HELOC Mortgage Stocks Brokerage
IRAs, 401(k) accounts and brokerage Market Equity Acct
accounts. They are more likely than average Savings Loan
to have their income direct deposited into
their bank accounts. In terms of other Mass Market Mass Affluent Affluent
channels of access, like ATM and mobile
Brokerage Accounts are nearly 3 times more likely with the Mass Affluent group than the Mass Market. Index
access, their usage rates are on par with the
of 100 = U.S. average
Mass Market.
Source: Nielsen Financial Track 2011
4 Copyright © 2012 The Nielsen Company.
Where do they live?
Capturing these Mass Affluent consumers will not be easy. Whereas the well-off were
once reliably concentrated in old money enclaves near the nation’s big cities and in
Sunbelt golf communities, today’s prosperity is more dispersed. According to the
analysis of high-asset households, the Mass Affluent is increasingly found beyond the
nation’s large metros and locating in smaller, exurban markets beyond the nation’s
major metros like San Francisco, Washington D.C. and the Tri-State area.
These top-ranked pockets of affluence include a number of “second cities” like Hartford,
CT, Monterey and Santa Barbara, CA—places noted for both livability and affordability.
These communities are home to newly-retired or partially retired Americans who want
to be connected to a big city without having to live there.
To map America’s new communities of wealth, our research identified households that
own more than $250,000 in Income Producing Assets (IPA). These are the customers
coveted by financial institutions because, unlike homes, cars or stamp collections, IPA
can readily be used to invest in big-ticket financial products.
Mass Affluent Concentration by DMA and Ethnicity
Mass Affluent Concentration by DMA
Very High (index 150+)
High (index 125-150)
Above Average (index 110-125)
Average (index 85-110)
Below Average (index under 85)
Asian American HHs with $100K + Income
1 Dot = 1,000 HHs
African American HHs with $100K + Income
1 Dot = 1,000 HHs
Hispanic HHs with $100K Income
1 Dot = 1,000 HHs
Mass Affluent Asian Mass Affluent African Mass Affluent Hispanics are
Americans are most Americans are most most heavily concentrated
heavily concentrated in the heavily concentrated in the Los Angeles, New York
San Francisco, Los Angeles in the New York and and Miami-Ft. Lauderdale
and New York markets. Washington DC markets. markets.
The use of segmentation allows us to find where the Mass Affluent live on the ground – allowing financial institutions to reach this portion of the market
more effectively for marketing purposes and determining opportunity in the market.
Source: Nielsen Pop-Facts Demographics 2012 (income dot density) and Nielsen P$YCLE (shading).
It makes little difference whether wealth is defined as high assets or strong earnings.
A map of households earning over $100,000 a year is nearly identical to the map of
heavy asset-owners. While some marketers hope to discover hidden wealth by reaching
consumers with high assets or strong earnings, this analysis shows that the correlation
between income and assets is undeniable: The Mass Affluent possess both large
paychecks and healthy bank accounts.
Copyright © 2012 The Nielsen Company. 5
Top 10 Markets % Penetration Market
Penetration Index
San Francisco 21.8% 216
Washington D.C. 18.6% 184
Hartford & New Haven, CT 18.2% 181
Boston 18.0% 179
New York 16.8% 167
Honolulu 16.6% 165
Baltimore 16.2% 161
Monterey-Salinas, CA 15.8% 157
San Diego 15.4% 153
Santa Barbara 15.2% 151
An Index of 100 represents an average propensity, therefore, the Mass Affluent are
more than twice as likely to live in San Francisco area.
Source: Nielsen Pop-Facts Demographics 2012
Top 5 Markets for % Penetration Market
African Americans with Penetration
$100K+ HH Income Index
Washington DC 5.4% 462
Baltimore 3.7% 313
Atlanta 3.1% 264
Norfolk, VA 2.5% 217
New York 2.4% 208
Top 5 Markets for % Penetration Market Top 5 Markets for % Penetration Market
Asian Americans with Penetration Hispanics with Penetration
$100K+ HH Income Index $100K+ HH Income Index
Honolulu 11.7% 1,105 Miami-Ft. Lauderdale 6.2% 476
San Francisco 7.9% 746 Los Angeles 4.5% 348
Los Angeles 3.3% 308 San Antonio 3.8% 291
Washington DC 2.6% 242
San Francisco 3.4% 263
San Diego 2.4% 230
San Diego 2.9% 228
Source: Nielsen Pop-Facts 2012
A Market Penetration Index of 100 represents average.
6 Copyright © 2012 The Nielsen Company.
Mass Affluent in the San Francisco Market:
Mass Affluent Concentration by ZIP Code
Very High (index 150+)
High (index 125-150)
Above Average (index 110-125)
Average (index 85-110)
Below Average (index under 85)
Asian American HHs with $100K Income
1 Dot = 1,000 HHs
African American HHs with $100K Income
1 Dot = 1,000 HHs
Hispanic HHs with $100K Income
1 Dot = 1,000 HHs
Through ties to P$YCLE® segmentation, we are able to locate the Mass Affluent on the ground by market. The San Francisco DMA has the strongest concentration
of the Mass Affluent in the country. When we take a more granular view of the San Francisco market we see strong pockets of the Mass Affluent – in general and
by race/ethnic groups.
Source: Nielsen Pop-Facts 2012 (for income dot density) and Nielsen P$YCLE 2011 (shading)
Copyright © 2012 The Nielsen Company. 7
THEIR LIFESTYLE
Lifestyle Behaviors of the Index
The Mass Affluent have money to partake
Mass Affluent
the finer things in life. They enjoy cultural
activities and often attend classical
music and opera performances and Belongs to a Country Club 287
visit museums and art galleries. They
Attends Classical/Opera Performance (1x/month) 272
are also civic-minded and engaged with
Contributes to NPR 263
the community, making donations to
charitable public service organizations Buys Light Classical Music 251
like NPR and PBS. Pride of ownership
Contributes to PBS 251
is important to them– they keep their
homes and yards in tip-top shape and are Belongs to a Civic Club 246
more than 28% more likely to pay more
Goes Sailing 237
for brands they can trust.ii
An Index of 100 represents an average U.S. household, therefore the Mass Affluent are
Despite their demanding careers, they
more than twice as likely to participate in these lifestyle behaviors.
make time to stay healthy and active.
Source: MRI Sports & Leisure Profiles and Nielsen P$YCLE 2011
They go sailing and cross country skiing
and enjoy golf and tennis at their country
clubs. Eating healthy, paying attention to
Smartphone and tablet penetration increases with income
nutrition and following an exercise routine
is a priority for the Mass Affluent. Smartphone and Tablet Penetration by Income Groups
Mobile Patterns 59%
Nielsen can confirm that income 45%
plays a role in the acquisition of still 35%
31%
comparatively expensive smartphones
and tablets. These devices are becoming
the preferred tools for online access and
12%
economic transactions in the future due
to portability and ease of use. Although it 4%
is relatively early for both devices, almost
60 percent of higher income consumers,
Smartphone Tablet
like the Mass Affluent, own a smartphone
and 31 percent own a tablet. <$30K $30K - $100K $100K+
Source: Nielsen Smartphone - Q4 2011 Mobile Insights, Tablet Nielsen NPower May 2012
Mass Affluent Mobile Usage
58%
34%
30%
23% 21%
18% 16% 15% 11% 9% 9%
Text Mobile Picture App Location- Text Alerts Picture Game Streaming Ringtone Video/Mobile
Internet Messaging Downloads based Downloads Downloads online music Downloads TV
services or Mobile
Radio
Measured for a 30 Day Period
Source: Nielsen Mobile Insights, Q3/Q4 2011
8 Copyright © 2012 The Nielsen Company.